It's simply an alternative employment strategy to Google's attempts at early optimization (making it hard as hell to get in) which they even concede produces a lot of false negatives.
The reality is a company the size of IBM is always going to have a turnover of 10% or more so the "lower 10% rule" is just a way of getting rid of those people who can't do the job. The 70% might feel a little demoralized but if they're good employees they'll use that to make themselves better. The upper 20% are the best of the best and deserve to be treated as such.
So to me the 70-20-10 principle just seems like IBM being honest with employees about where they stand and giving them a chance to recognize it and do better if they so choose (some people are happy with average).